1. International Development

2. Continuing our discussion of Global Poverty…. In the last Power Point (The North-South Gap) we examined the dependency theory argument for why we see such tremendous economic inequality between a small group of rich countries and the rest of the world. In this Power Point Presentation on “International Development” we look toward ways in which poor countries might be able to rise out of poverty.

3. The Concept of Development It is important to keep in mind that the idea of development is a subjective one. We need to be very careful to avoid ethnocentric thinking on development. That is, we need to be careful in assuming that what we consider ‘developed’ is the same as what another society or culture considers ‘developed’. Mahatma Gandhi was once asked: “What do you think of Western Civilization?” and he responded “I think it would be a very good idea.”

4. Economic Development While we need to keep in mind that what constitutes “development” is complex and subjective, one simple measure of economic development is per capital GDP Your Textbook’s Definition of Economic Development: “The combined processes of capital accumulation, rising per capita incomes (with consequent falling birthrates) increasing skills of the population, adoption of new technological styles, and other related social and economic changes” (Goldstein and Pevehouse 2014, 461)..

5. Economic Growth in the Global South Economic growth rose in the Global South during the 1970s, declined in the 1980s, and rose again in the 1990s. This growth is not evenly distributed across the Global South. Rather, it has been concentrated in China and South Asia. Africa has not seen the same growth trends as China, India, or even Latin America. The growth achieved in China, South Asia, and in some Latin American countries,demonstrates that it is possible to rise out poverty. (This growth has posed a challenge to the Dependency Theory assumption that former colonies are forever trapped in a vicious cycle of poverty.)

6. NICs Newly Industrialized Countries (NICs)- a handful of countries that were able to rise out of poverty to achieve impressive economic growth and capital accumulation. The NIC growth strategy combines strategic government investments, controlled trade liberalization, and opening the economy to foreign investment. The “Four Tigers” or “Four Dragons” were the most successful NICs Taiwan Singapore South Korea Hong Kong Scholars debate whether or not the growth strategy that these four tigers followed is replicable in Africa, Latin America, and other parts of Asia.

7. China China successfully adopted the NIC growth strategy The population of China is 1.3 BILLION (compare to the approximately 300 million people in the U.S). China’s ability to achieve economic development is significant for improving global prosperity and reducing global poverty. China’s economy has been growing at an incredible 10% a year (the U.S. and other ‘developed countries” have annual growth rates closer to 2%) China has achieved this economic growth under an authoritarian government. Is China moving toward democracy? Will greater economic prosperity in China build a middle class that will demand political reform?

8. India For decades, India’s economy was based on a modified version of socialism. The state controlled large industries. Beginning in the 1990s India began implementing market reforms and achieving very high growth rates. Despite high annual growth rates, extreme poverty remains an entrenched and grinding reality for many, many Indians. India has been able to achieve remarkable success in developing it service and information sectors. India is a democratic country. Can it continue to sustain growth and strengthen its democratic institutions?

9. North-South Debt One way for poor countries to attain the necessary capital to spur economic growth is to borrow money from countries in the Global North or from international financial institutions, such as the IMF and World Bank (both of which are controlled and financed by countries in the Global North). Unfortunately, what has happened is that poor countries in the Global South end up paying huge portions of their GDP in interest payments. Debt can weigh heavily on a poor economy. 23% percent of the GDP in the Global South goes to debt repayment. Dependency scholars argue that foreign debt has been another (though perhaps unintended) neocolonial pattern that locks poor countries into a vicious cycle of poverty.

10. Drop the Debt Campaign Non-governmental organizations, such as Jubilee 2000, have put pressure on governments in the Global North to “drop the debt”. That is, the Drop the Debt Campaign wants rich countries to forgive the debt of poor countries. See “Why drop the Debt”: http://www.jubileeusa.org/truth-about-debt/truth-about-debt.html http://www.jubileeusa.org/truth-about-debt/truth-about-debt.html The Drop the Debt Campaign (whose spokesperson is Bono) has actually been very effective in getting rich countries to forgive the debt of many poor countries. http://abcnews.go.com/Entertainment/story?id=105847 http://abcnews.go.com/Entertainment/story?id=105847 The Drop the Debt Campaign now has a sister campaign- the ONE Campaign, whose goal is to end extreme poverty. See www.One.org

11. Debt Renegotiation Aided by the work of international social movements and NGOs (such as the “Drop the Debt Campaign”) the Issue of Debt Renegotiation has been propelled into prominent international discussions Debt renegotiation has developed around he idea that very poor countries should have debt relief. The idea that countries in the Global North should forgive debt or renegotiate the debt of the Global South has become an emerging international norm. In debt renegotiations states in the Global North and states in the Global South seek to figure out how to restructure the debt of poor countries so that debt payments do not inhibit the ability of very poor countries to meet the basic needs of their populations. There are now regular international conferences to deal with the North-South debt issue (See your textbook’s discussion of the Paris Club and the London Club p.479). Despite transnational social movement and NGO efforts to improve global justice through putting normative pressure on rich countries to drop the North-South Debt- “The Global South owes 4 trillion in foreign debt and pays 1 trillion a year to service it” (Goldstein and Pevehouse 2014, p. 479).

12. Micro-Credit Micro-credit developed as an alternative to the large international loans which, as we have been discussing, can be difficult for poor countries to repay, and which can trap a poor country under crushing interest rates. Instead, micro-credit (or micro-finance) involves giving small loans directly to individuals in poor countries (As opposed to giving large loans to the government of poor countries). Many international aid agencies have gravitated toward providing small loans (micro-credit) directly to poor people, with the assumption that by providing a small ‘start-up’ loan to a very poor person you can effectively unleash the entrepreneurship of individuals who have been trapped in extreme poverty. The micro- loan goes directly to the individual rather than through a large, and possibly corrupt, government bureaucracy.

13. Micro-Credit Continued…. Micro-credit was pioneered by Muhammed Ynus in Bangldesh. His Grameen Bank lends small loans to poor individuals (many of whom are women) to invest in the creation of a small business (such as basket weaving). Ynus received the Nobel Peace Prize for pioneering this innovative way to approach poverty relief in very poor countries. http://www.grameen-info.org/ The repayment rates on micro-credit have been relatively high.